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Accounting firm PwC has had a 2017 to forgetbut it just got even worse.

First there was the embarrassing gaffe at this year's Oscar's ceremony, which led to the wrong winner being announced for the Best Picture award, the climax of the evening.

But in business and reputation terms, much worse has followed that. In March, it settled with the administrators of collapsed investment firm MF Global , which had been suing PwC for $3 billion in damages from what it claimed was poor accounting.

Then in June, the U.K.'s Financial Reporting Council started an investigation into its audits of telecom company's BT plc's operations in Italy . BT has taken a charge of nearly $700 million against the unit, which was raided in May by Italian police on suspicion of fraud.

Read : PwC Is Keeping Its Job Handing Out the Oscars Envelopes

Now, it's being tarred and feathered by Ukraine due to its auditing of the country's second-largest bank, PrivatBank, which collapsed last year. The collapse necessitated a multi-billion dollar bailout, indirectly funded by the International Monetary Fund.

The National Bank of Ukraine, the country's central bank, said late Thursday it had revoked the license of PwC to audit local banks, saying that it had verified "misrepresented financial information in the financial statements" of Privat.

PwC, which had audited the bank for over a decade, said it was "very disappointed" by the decision.

"We do not believe that the reasons given by the NBU justify its decision," the firm said in an e-mailed statement, adding that it will "examine all options for reversing this decision."

Read : Ukraine Blames Russian Security Services for Recent Cyber Attack

The NBU's action catches PwC squarely in the middle of a battle for control of the country and its economy, one that has been fought out between various governments and an often shadowy business elite over a quarter of a century.

Last month, the Ukrainian government had said it could need up to another $1.5 billion to fill the holes in Privat's balance sheet, created by bad loans made to its owners and their associates. That's on top of a $4.2 billion capital shortfall disclosed in the bank's 2016 report.

Any losses that can't be recovered from the bank's borrowers will have to be covered, ultimately, out of a $17.5 billion IMF loan package, to be repaid, ultimately, by taxpayers.

Ukraine's bailout was agreed to in haste after Russia's invasion of Crimea and eastern Ukraine in 2014 finally exposed the fragility of an economy and financial system run through with corruption. Its currency, the hryvnia, has lost over two-thirds of its value against the dollar since 2014, further exacerbating poverty in what was already one of the poorest countries in Europe.

The IMF had insisted on an exhaustive clean-up of the banking system as a condition for the loan. Many had doubted it would enforce those conditions thoroughly, given that the U.S. and EU, whose governments effectively control IMF policy, wanted to stop the country being broken up by Vladimir Putin's Russia. But the NBU took to the task with relish, closing over 80 institutions thatin realitywere little more than piggy-banks for their owners.

Read : Trump: I Wouldnt Have Appointed Sessions If Id Known About Russia Recusal

The NBU taking Privat into special administration at the end of 2016 was widely seen as the strongest proof to date of its seriousness. Privat was not only the biggest locally-owned bank, with over 20% of all retail deposits in the country and processing more than 60% of its electronic transfers. It was also backed by the man widely seen as the most powerful of all the oligarchs in the anti-Russian west of the country, Ihor Kolomoysky.

Kolomoysky had been politically untouchable for years, and it was he who bankrolled the militias that stopped the advance of Russian-backed rebels through eastern Ukraine in 2014. But the IMF's pressure meant that President Petro Poroshenko was forced to sacrifice a relationship that had previously worked to his advantage. That led to him firing Kolomoysky from his position as a regional governor and ejecting his managers from notionally state-controlled companies like pipeline operator Ukrtransnafta .

Kolomoysky and his partner Hennady Boholyubov have repeatedly denied the NBU's claims. More recently, they have sued the government and the NBU in a Kiev court to have themselves reinstated as owners of the bank, claiming that the NBU's seizure was unnecessary and unlawful. Their case was somewhat weakened when the government, in reaction, leaked a letter to Prime Minister Volodymyr Groysman, at the end of 2016, admitting that the bank could not carry on operating without state support, urging the government to take it over and promising not to interfere with its future management.

Kateryna Rozhkova, the NBU deputy governor who has presided over the crackdown, isn't letting things rest yet. In a statement on the Privat case e-mailed to Fortune , she said that: "There will also be a thorough investigation whether criminal offenses have been committed. If they have, those responsible must be brought to justice.

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A Miserable 2017 for PriceWaterhouseCoopers Just Got Worse - Fortune

This file photo taken on April 06, 2015 shows a man collecting debris on the roof of burned house after shelling in the eastern Ukrainian city of Donetsk. (Photo by AFP)

These are the headlines we are tracking for you in this episode of On the News Line:

Ukraine conflict

Ukraines eastern regions have been the scene of deadly clashes between pro-Russian forces and Kiev troops since November 2014. The violence erupted in the wake of political developments in the country which led to the rise of a western-backed government at the expense of a pro-Russia one. Now a surprise announcement by the pro-Russian leader of self-proclaimed Donetsk Peoples Republic in Ukraines east has cast cloud on prospects of resolving the crisis amicably. He declared the creation of a new 'state' called Malorossiya.

Stop the interference

New tensions between the US and VenezuelaVenezuelan defense minister has condemned what he calls "gross interference" in the countrys internal affairs after reports said Washington is readying fresh sanctions against Caracas. The United States is preparing sanctions against several senior Venezuelan government figures including defense chief Vladmiri Padrino Lopez. This is part of the Trump administrations efforts to ratchet up pressure on Venezuelan President Nicolas Maduro amid a continued crisis in the Latin American nation. Venezuela considers the US actions as a violation of its sovereignty.

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Ukraine conflict - Press TV

A patient waits in a hospital treating drug users in the rebel capital of Donetsk, Ukraine AFP / Aleksey FILIPPOV

By AGENCE FRANCE PRESSE, DONETSK, Ukraine, Jul 22 As clashes drag on in east Ukraine between government forces and Russian-backed rebels, health activist Natalia Gurova is fighting another battle of her own.

Gurova manages a project in her insurgent-controlled home city of Lugansk handing out clean syringes and condoms to drug-users and sex workers who are most at risk from HIV and hepatitis.

That puts her at the forefront of the perilous struggle against the spread of infections as more than three years of conflict and rebel rule have hit vital treatment programmes.

Everything has worsened, Gurova, from the All-Ukrainian Public Health Association, a charitable organisation, told AFP.

Getting supplies such as condoms, lubricants and hygienic wipes into rebel-held territory remains a constant challenge as they run the gauntlet of checkpoints to cross the tightly guarded frontline.

While Gurova still manages to keep these programmes going, substitute treatments for drug addicts including methadone have stopped entirely.

This has seen users who were being weaned away from injecting themselves turn to dangerous local alternatives and bolstered the threat of the spread of diseases.

There are more cases of HIV infections among users and it is very difficult to make contact with them, Gurova said.

Alongside this problem, activists say there has been a rise in the number of sex workers in the grey zone along the frontline.

Battle for survival

Prior to the start of the conflict in April 2014, ex-Soviet Ukraine especially in its eastern regions of Donetsk and Lugansk was already battling one of the most severe HIV epidemics in Eastern Europe.

But thanks to progressive policies the country was making progress and had managed to reduce the rate of HIV infections, most dramatically among young drug users.

After the war flared up in 2014, experts soon warned that the conflict risked jeopardising any gains that had been made.

As Kiev lost control over Donetsk and Lugansk, health services and key treatments for infections were hit.

In 2015, international actors managed to stave off an imminent crisis by negotiating with Kiev and the rebels to keep supplying antiretroviral drugs to thousands of HIV positive people in the separatist territories.

Emergency funds were provided and the United Nations now estimates that about 10,000 adults and children with HIV in rebel-held areas are receiving the drugs.

Prevention hit

But while negotiations have been successful in getting the most urgent treatments through for now, in terms of prevention the situation still looks dire.

Doctor Igor Pirogov, who works at a hospital treating drug users in rebel capital Donetsk, said that the war has seriously disrupted attempts to curb addiction.

Most of our patients put on a uniform, got a weapon and went off to fight for the insurgents, Pirogov said.

Many even said openly that they were using more drugs during the war than when it was peaceful.

The internationally approved opioid replacement treatments that had become the norm in Ukraine have ended.

Due to security restrictions the Ukrainian authorities say they are unable to deliver substitute drugs across the frontline.

For their part the rebels seem to have followed in the footsteps of their backers in Russia where methadone is banned and turned the clock back on progressive treatments.

Activist Gurova said that about 900 patients had lost access to the methadone programme, leading many to turn instead to dangerous local alternatives.

At the same time she said more women around the conflict zone have turned to prostitution also putting them at greater risk.

There are no jobs, no work, no earnings this is the only option for them so it all leads to an increase in the number of sex workers, she explained.

Problem for Ukraine

As it has waged war against the insurgents on the battlefield, the government in Kiev has shown a tendency to disown the health crisis in rebel regions.

While the situation in areas under insurgent control has deteriorated, the rest of the country has continued to make headway tackling HIV as authorities have pushed on with the policies that were yielding results.

The decline in the rates of HIV epidemic growth is encouraging, Pavlo Skala from the Alliance for Public Health told AFP.

But experts warn that any improvements being made risk being undermined by a uptick of infections in Ukraines rebel-held regions and that Kiev cannot turn a blind eye to the problems happening across the frontline.

Soldiers stand on the demarcation line between the two territories and they can control the border, Skala said.

But they cannot control the spread of epidemics.

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In rebel-held Ukraine, activists struggle to stem HIV spread - Capital FM Kenya (press release) (blog)

Ukraine's Defense Ministry said on July 20 that eight Ukrainian soldiers were killed and 10 were wounded in the previous 24 hours as Russia-backed separatists stepped up shelling attacks on their positions in the country's east.

The ministry said on its Facebook page that four servicemen were killed and seven were wounded on July 20, while on the previous day, four soldiers were killed and three wounded.

A ministry spokesman had initially said that nine soldiers were killed and five wounded over the past two days.

The reported toll was among the highest in recent months in the conflict, which persists despite an internationally backed 2015 deal that imposed a cease-fire and set out steps to resolve the status of separatist-held areas in eastern Ukraine.

After a Moscow-friendly president was pushed from power by massive protests in Kyiv, Russia seized the Crimean Peninsula from Ukraine and fomented separatism in eastern Ukraine, where the ensuing war has killed more than 10,000 people since April 2014.

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Ukraine Says Eight Soldiers Killed Amid Intense Shelling - RadioFreeEurope/RadioLiberty

The Russian government said it was taken by surprise Tuesday when the rebel leader of a breakaway region of eastern Ukraine proposed the creation of a new nation-state called Malorossiya, or Little Russia.

The head of the self-declared Donetsk Peoples Republic, Alexander Zakharchenko, told reporters that the new country would include his territory and the neighboring self-declared Luhansk Peoples Republic, and that it would eventually become part of a wider union with Belarus and Russia.

"We believe that the state of Ukraine cannot be reinstated the way it used to be, he said.

Russia, which openly sympathizes with the pro-Russia separatists but rejects allegations that it has provided military support, denied any role in the proposal and said it still backed the 2015 peace agreement crafted in Minsk, Belarus, to reintegrate the breakaway territories into Ukraine.

Alexander Ermochenko / European PressPhoto Agency

Alexander Zakharchenko, leader of the self-proclaimed Donetsk People's Republic, speaks in downtown Donetsk, Ukraine, on Jan. 22, 2016

Alexander Zakharchenko, leader of the self-proclaimed Donetsk People's Republic, speaks in downtown Donetsk, Ukraine, on Jan. 22, 2016 (Alexander Ermochenko / European PressPhoto Agency)

The proposal for Malorossiya was nothing more than a personal initiative of the rebel leaders, Kremlin spokesman Dmitry Peskov told reporters.

The idea should be subject to reflection and analysis, but we remain committed to the Minsk accords, he said.

Boris Gryzlov, Russia's envoy to the Minsk talks, remained silent for several hours after the announcement, but later in the day dismissed the idea as nothing more than fodder for public discussion.

This announcement does not have any legal consequences, he told Russian news agencies.

Even the rebel government in Luhansk seemed caught off guard by the proposal to include it in a new country.

Luhansk had not been informed of the plans and we are not willing to consider it as something that needs attention, a representative told the news agency Interfax.

Ukrainian President Petro Poroshenko, however, suggested that Russia was behind the rebel announcement, saying at a news conference in Tbilisi, Georgia, that Zakharchenko is not a political figure, but a puppet transmitting the Kremlin messages.

He promised to bring the eastern regions and Crimea back into Kievs fold.

The conflict in Ukraine began in 2014 after a mass street movement led to the ousting that February of pro-Kremlin President Viktor Yanukovich.

Russia, which criticized the demonstrations as a Western-orchestrated coup, moved troops into the Crimean peninsula, ostensibly to protect its compatriots and Russian speakers from Ukrainian nationalists. But in March 2014, Russia annexed Crimea, and in the regions of Donetsk and Luhansk, pro-Russia separatist militia groups took over government buildings and declared independence from Kiev.

The Minsk peace talks, which were orchestrated by Germany, Britain and France, have stumbled as fighting has continued to flare up in the region. More than 10,000 people have died in the conflict, many of them civilians. Peace talks were scheduled to resume this week.

Zakharchenko made his announcement at a news conference in the city of Donetsk, which he said would be the capital of the new country. He wore fatigues and various medals on his chest.

He presented a newly written constitution for Malorossiya, a map showing all of Ukraine except Crimea, and a flag to represent the new state. The flag was adapted from that of Bohdan Khmelnytsky, a 17th century Cossack leader who led a revolt against Polish rule in Ukraine and later swore allegiance to Russia.

Its not a revolution; its a return to history, Zakharchenko said.

The name Malorossiya comes from the historical name for parts of Ukraine that once made up the Russian empire. By choosing the name, the rebel governments seemed to be replacing Novorossiya, another historical term once used by Russian President Vladimir Putin to describe the southeast territories of Ukraine.

Novorossiya became a concept many rebel leaders and fighters saw as a Kremlin-approved initiative to expand its territories. But Russia distanced itself from the idea as the war raged on, Western sanctions began to hurt its economy and the Minsk agreement came into force.

In Washington on Tuesday, a representative of the State Department who was asked about Malorossiya said: That is something thats certainly an area of concern to us, but beyond that, I dont want to dignify it with a response."

Republican Sen. John McCain of Arizona released a statement blaming the Russian president, saying that the ultimate responsibility for this latest flagrant violation of Ukraine's sovereignty lies squarely with Vladimir Putin's Russia, upon whose leadership, financing, troops and weapons the separatists are entirely dependent.

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Ayres is a special correspondent.

sabra.ayres@latimes.com

Twitter: @sabraayres

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Ukraine's separatists propose a new country: Little Russia. Kremlin denies any involvement - Los Angeles Times